HISTORICAL PERSPECTIVE INDIA HAD A GLORIOUS EXPORT TRADITION. - - PowerPoint PPT Presentation

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INDIA’S EXPORT TRADE

HISTORICAL PERSPECTIVE

• INDIA HAD A GLORIOUS EXPORT TRADITION.
• INDIAN SPICES AND FINE CLOTH WERE EXPORTED OVER

CENTURIES TO THE EAST AND THE WEST.

• EVEN WITH THE LIMITATIONS IMPOSED BY THE

CIRCUMSTANCES, INDIA'S EXPORTS AMOUNTED TO

• RS. 300 CRORES IN 1920s.
• IN THE FIRST YEAR AFTER INDEPENDENCE OUR EXPORTS

WERE AMOUNTED TO RS. 400 CRORES.

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TRENDS

• A MAJOR AND SIGNIFICANT STEP TO BOOST THE

EXPORTS WAS THE STEP TAKEN TO DEVALUE THE INDIAN RUPEE IN 1966, TO MAKE THE INDIAN PRODUCTS MORE COMPETITIVE.

• SIMULTANEOUSLY A NEW EXPORT-IMPORT POLICY WAS

BROUGHT IN, TO HELP EXPORTERS TO INCREASE EXPORT PRODUCTION.

• THE TREND FROM 1967-68 TO 1972-73 SHOWS THAT:
• THE IMPORTS FELL FROM RS.2,008 CRORES TO

Rs.1,861 CRORES.

• EXPORT ROSE FROM RS.1,193 CRORES TO

RS.1,971 CRORES.

CONT…

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TRENDS

• IN 1987- 88 EXPORTS INCREASED TO RS. 15,719 CRORES
• -- 25% RISE.
• IN 1988- 89 INCREASED BY 28% AND
• IN 1990- 91 INCREASED BY 17% WHEN IT WAS RS. 32,553
• CRORES. (EXPORTS TO USSR ALONE AMOUNTED TO
• RS. 5,254 CRORES).
• EXPORTS DWINDLED CONSIDERABLY AND IN THE YEAR

1992- 93 OUR EXPORTS TO ENTIRE EASTERN EUROPE INCLUDING RUSSIA AMOUNTED TO RS. 2,359 CRORES OUT OF A TOTAL RS. 69,548 CRORES, THIS SETBACK WAS RECOVERED QUICKLY.

CONT….

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TRENDS

• SINCE IMPORTS OUTPACED EXPORTS, TRADE DEFICITS

BEGAN TO BUILD UP STEADILY FROM 1979 - 80.

• DUE TO SOLID INCREASE IN THE EXPORTS OF SERVICES

AND ALSO DUE TO FOREIGN INVESTMENTS IN INDIA, AND THE NON-RESIDENT INDIAN SAVINGS, THE TRADE BALANCE NOT ONLY BECAME POSITIVE, BUT STARTED BUILDING UP SIZABLE FOREIGN EXCHANGE RESERVES AND TOUCHED U.S. $ 100 BILLION BY THE BEGINNING OF 2004.

CONT…..

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TRENDS

• REFORMS HAVE BEEN EXTENDED AND THE RUPEE HAS

BEEN MADE FULLY CURRENT ACCOUNT CONVERTIBLE, ACCEPTING THE OBLIGATIONS UNDER ARTICLE VII OF THE IMF.

• A NEW INDUSTRIAL POLICY WAS BROUGHT IN, WHICH

CHANGED THE VERY CONCEPT OF REGULATED INDUSTRIAL LICENSING, FOREIGN INVESTMENT AND OWNERSHIP CRITERIA OF INDUSTRIES.

• NEW EXPORT-IMPORT POLICY WAS MADE FOR A PERIOD

OF FIVE YEARS, WHICH WAS QUITE LIBERAL, REDUCED RESTRICTIONS AND WAS EXPORT AND INDUSTRY ORIENTED.

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TRENDS THE FOREIGN EXCHANGE BALANCE OF THE COUNTRY IS ARRIVED AT AFTER TAKING:

• ALL THE INWARD REMITTANCES OF FOREIGN

EXCHANGE, NRI REMITTANCES, TOGETHER WITH EXPORTS AND ON THE ONE HAND AND ALL OTHER FOREIGN EXCHANGE OUTGOES SUCH AS DEBT SERVICING, AND FOREIGN EXPENSE PAYMENTS THE COUNTRY HAS TO MAKE, AND THE IMPORTS ON THE OTHER HAND.

• THE DIFFERENCE BETWEEN EXPORTS AND IMPORTS IS

REFERRED TO AS TRADE BALANCE.

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COMPOSITION OF EXPORTS EXPORTS ARE BROADLY CLASSIFIED INTO:

• TRADITIONAL EXPORTS: INDIA HAS BEEN EXPORTING

OVER A LONG PERIOD WHICH INCLUDES JUTE, TEA, COTTON FABRIC, CASHEW, SPICES AND COFFEE etc.

• NON-TRADITIONAL EXPORTS: THEY ARE RELATED TO

THE SECTORAL GROWTH IN THE ECONOMY AND THE INDUSTRIES OF THE COUNTRY AND INCLUDE PRODUCTS OF ENGINEERING GOODS, MARINE PRODUCTS, LEATHER PRODUCTS, CHEMICALS, TEXTILE GARMENTS, GEM AND JEWELLERY AND COMPUTER SOFTWARE etc.

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DIRECTION OF EXPORT TRADE A KNOWLEDGE OF THE COUNTRIES TO WHICH WE EXPORT AND THE TREND OF THEIR INCREASE OR DECREASE IS IMPORTANT AND IT INDICATES:

• THE DIRECTION IN WHICH OUR EXPORTS ARE GROWING

AND GIVES CLEAR SIGNALS TO THE PLANNERS AS WELL AS INDIVIDUAL FIRMS OF THE POTENTIAL AVAILABLE FOR EXPORTS, OUR STRENGTHS AND WEAKNESSES AND ALSO THE UTILIZATION OF THE RESOURCES WE HAVE FOR MAXIMIZING EXPORTS.

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DIRECTION OF EXPORT TRADE IT IS INTERESTING TO NOTE THAT:

• OUR EXPORTS TO DEVELOPING COUNTRIES HAVE

INCREASED FROM Rs. 7,965 CRORES IN 1990 - 91 TO

• Rs. 33,059 CRORES IN 1997- 98.
• MANY OF THE DEVELOPING COUNTRIES HAVE COME

OUT OF THE DEBT BURDEN OF THE EIGHTIES AND ARE FAST BECOMING OPEN MARKET ECONOMIES.

• INDIA CAN CONCENTRATE AND INCREASE TRADE WITH

THEM .

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DIRECTION OF EXPORT TRADE THE FIVE COUNTRIES WHICH ALWAYS HAD A LEAD OVER ALL OTHER COUNTRIES IN OUR EXPORTS OVER THE YEARS WERE:

• U.S.A.
• OLD U.S.S.R. (NOW THE DIMINISHED RUSSIA).
• JAPAN.
• GERMANY.
• U.K.

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TEA TO PROVIDE RELIEF FOR THE SUFFERINGS OF PLANTATION GROWERS, WHAT IS REQUIRED IS TO TACKLE THE PROBLEM ON THE FOLLOWING LINES:

• IN MANY TEA ESTATES THE TEA BUSHES ARE ALMOST

CENTURY OLD, TO PHASE THEM OUT TO IMPROVE THE QUALITY A HUGE INVESTMENT IS REQUIRED.

• DUE TO ONSLAUGHT OF SOFT DRINKS, AND LACK OF

PROMOTION CONSUMPTION OF TEA HAS FALLEN, MEASURES TO PROMOTE TEA ARE NEEDED.

• THE PRESENT SYSTEM OF TEA TRADING HAS TO BE

MODIFIED TO ENSURE THAT THE AUCTION PRICES DO NOT FALL SHORT OF THE COST OF PRODUCTION.

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COFFEE

• INDIA EXPORTS PRACTICALLY 80% OF ITS PRODUCTION.
• WE PRODUCE TWO IMPORTANT TYPES OF COFFEE-

ARABICA AND ROBUSTA.

• KARNATAKA PRODUCES 70%, KERALA AND TAMIL NADU

22% . IN THE EXPORT MARKET

• INDIAN CONTRIBUTION IS HARDLY 5%.
• BRAZIL - 40% , FOLLOWED BY COLUMBIA.
• VIETNAM INCREASED ITS COFFEE PRODUCTION 11

TIMES IN THE LAST DECADE, IS RESPONSIBLE FOR THE FLOOD OF CHEAPER COFFEE OF LOWER QUALITY.

• INDIA EXPORTED 184000 TONS OF COFFEE IN 2000-2001

OF Rs. 1185 CRORES.

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TEXTILES

• TEXTILES ARE IMPORTANT IN OUR EXPORTS AND HAVE

TREMENDOUS POTENTIAL.

• INTERNATIONAL TRADE IN TEXTILE AND CLOTHING HAS

BEEN REGULATED SINCE 1974.

• IN INTERNATIONAL TRADE WHERE IN SUCH A FREE TRADE

SITUATION, THE COUNTRY SHOULD PREPARE FOR A LARGER VOLUME OF PRODUCTION, ESPECIALLY IN THE GARMENT SECTOR.

• WITH THE DISMANTLING OF THE MFA AND THE QUOTA

SYSTEM, THE RULES OF DOING BUSINESS IN GARMENTS EXPORT WILL CHANGE RAPIDLY FROM THE VANISHING QUOTAS AND DRAWBACKS TO THE INCREASED COMPETITION FROM THE OTHER COUNTRIES LIKE CHINA.

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TEXTILES

• THERE IS ALWAYS A DEARTH OF TRAINED PERSONNEL IN

THE COUNTRY.

• 15 YEARS AGO CHINA ENACTED A LEGISLATION TO WHICH

ANY ENTREPRENEUR PUTTING UP A GARMENT FACTORY SHOULD EARMARK 5% OF THE INVESTMENT FOR TRAINING, WHICH IS TAX FREE.

• NOW THEY HAVE TRAINED MAN POWER.
• NO WONDER CHINA ACCOUNTS FOR 20% OF WORLD TRADE

IN GARMENTS.

• WE ARE WAY DOWN IN THE SCALE.

CONT….

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TEXTILES

• THE PRODUCTION CAPACITY IN INDIA IS LOW.
• KNOWING INDIA’S POTENTIAL AND CAPABILITIES, A LARGE

NUMBER OF WESTERN BUYERS ARE ALREADY APPROACHING INDIA.

• WAL-MART AND TARGET, RUSSEL CORPORATION, SEARS

ROEBUCK ARE ALSO PROCESSING OF FINALIZING ADDITIONAL AS WELL AS NEW ORDERS FOR SUPPLY.

• MANY OF THESE IMPORTERS ARE ALSO PLANNING TO

HAVE JOINT VENTURES WITH INDIAN MANUFACTURERS.

CONT….

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TEXTILES

• THE INDIAN GOVERNMENT SHOULD FORM A WORKING

GROUP IMMEDIATELY TO LOOK INTO THE NEEDS OF THE GARMENT EXPORTERS BY WAY OF FINANCE, FACTORIES, INFRASTRUCTURE PORT/AIR FACILITIES etc. TO DISPATCH LARGE CONSIGNMENTS AND HELP THE INDUSTRY TO OVERCOME THE VARIOUS DRAWBACKS, AT THIS CRUCIAL JUNCTURE WHEN THE NEW DOORS ARE OPENED.

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CARPETS

• THIS IS A VERY INTERESTING SECTOR OF OUR EXPORTS.
• INDIAN EXPORTS ARE HAND MADE AND HAND-KNOTTED,

MILL MADE AND SILK CARPETS.

• HAND MADE CARPETS CONTRIBUTE 75% OF THE TOTAL

CARPET EXPORTS AND AMOUNTED TO Rs. 2433 CRORES IN 2001- 02.

• IRAN THE TRADITIONAL SUPPLIER OF CARPETS HAS NOT

BEEN ABLE TO FULFILL THE WORLD DEMAND.

• WITH IRAN DISAPPEARING FROM THE MARKET, INDIA,

CHINA AND TURKEY HAVE BECOME THE MAIN SUPPLIERS IN THE INTERNATIONAL MARKET.

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ENGINEERING EXPORTS

• IT IS AN IMPORTANT AND MAJOR COMPONENT OF OUR

EXPORTS.

• OUR EXPORTS WERE OF Rs. 16,375 CRORES IN 1997- 98,

INCREASED TO Rs. 38,093 CRORES IN 2002- 03. AN INCREASE BY 130% OVER FIVE YEARS.

• IN THE EIGHTIES AND NINETIES USA AND EUROPE

DECLINED IN THE MANUFACTURING SECTOR DUE TO HIGH OVERHEADS AND LABOUR COSTS.

• MANY OF THE INDUSTRIES TRIED TO SHIFT

MANUFACTURING TO DEVELOPING COUNTRIES.

• CHINA GOT THE LION’S SHARE DUE TO THE VERY LOW

LABOUR COSTS AND GOOD INFRASTRUCTURE PROVIDED BY THE GOVERNMENT. CONT….

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ENGINEERING EXPORTS MANUFACTURING IN INDIA IS RAPIDLY ACHIEVING INTERNATIONAL STANDARDS IS BORNE OUT BY THE EXCELLENT GROWTH IN :

• PHYSICAL EXPORT OF ENGINEERING GOODS.
• INDIA BEING USED AS SOURCING HUB BY MANY

INTERNATIONAL INDUSTRIES.

• RECOGNITION OF INDIAN DESIGN CAPABILITIES IN

ENGINEERING FACULTIES AS WELL AS IN I T INDUSTRIES.

CONT….

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ENGINEERING EXPORTS THE CARS IN MANY COUNTRIES IS THE ULTIMATE IN SOPHISTICATION.

• THE EXPORTS OF INDIAN MADE CARS WAS 1,00,000 UNITS

IN 2003 AGAINST 64,516 OF 2002.

• THE KOREAN MAJOR, HYUNDAI HAS ALREADY SET UP ITS

PLANT AS AN EXCLUSIVE SOURCE FOR SANTRO.

• FROM JUST 20 CARS IN 1999, ITS EXPORTS WERE 30,000 UNITS

IN 2003.

• TATA MOTORS HAVE CONTRACTED TO SUPPLY 100,000

CARS TO ROVERS IN UK OVER A PERIOD OF FIVE YEARS.

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ENGINEERING EXPORTS

• THE POTENTIAL IN THE INTERNATIONAL MARKET FOR

AUTO ANCILLARIES IS ENORMOUS.

• IT IS ESTIMATED TO BE VERY MUCH MORE THAN A

HUNDRED TIMES THAT OF THE INDIAN MARKET WHICH IS

• Rs. 20,000 CRORES PER ANNUM.

CONT….

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ENGINEERING EXPORTS

• INDIA IS BEING MADE THE HUB OF OUTSOURCING FOR

FINISHED PRODUCTS AND COMPONENTS BY MANY INTERNATIONAL ORGANIZATIONS.

• INTERNATIONAL MAJORS FEEL THAT INDIA WOULD BE

DEPENDABLE SOURCE TO GET QUALITY AND PRICE WISE COMPETITIVE PRODUCTION ON A LONG TERM BASIS.

• IN SHIFTING THE SOURCE OF MANUFACTURING,

INDUSTRIES WILL ALWAYS LOOK FOR THE DEPENDABLE SUPPLIER, CAPACITY TO REDESIGN THE PRODUCT AT SHORT NOTICE, AND COMPETITIVE SUPPLIES OVER A REASONABLY LONG PERIOD OF TIME. CONT….

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ENGINEERING EXPORTS

• GENERAL MOTORS CORPORATION, THE WORLD’S

LARGEST CAR MANUFACTURER HAS SET UP AN R&D LAB IN BANGALORE.

• IT IS THE FIRST SUCH CENTRE FOR GM OUTSIDE ITS

HEADQUARTERS IN MICHIGAN, USA.

• SUZUKI MOTORS CORPORATION HAS DECIDED TO MAKE

INDIA A BASE FOR RESEARCH AND DEVELOPMENT OF NEW MODELS OF CARS FOR ASIAN MARKET.

• THIS WILL BE THE SECOND R&D CENTRE IN ASIA, AND

THE FIRST OUTSIDE JAPAN.

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MARINE PRODUCTS EXPORTS

• THE INDIAN MARINE PRODUCTS INDUSTRY EXPORTS A

WIDE RANGE AND VARIETY OF FISH, INCLUDING SHRIMP, MACKEREL, TUNA, SQUIDS, CUTTLE - FISH, SARDINES, DRIED FISH AND LOBSTER TAILS.

• SHRIMP HAS BEEN THE MAINSTAY OF OUR EXPORTS

AND AMOUNTS TO 60% OF OUR TOTAL EXPORTS.

CONT….

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MARINE PRODUCTS EXPORTS AQUACULTURE IS ATTRACTIVE TO MARINE EXPORTERS AND NEW ENTREPRENEURS ARE ENTERING THE FIELD BECAUSE:

• SHRIMPS ARE HIGH VALUE, HIGH VOLUME ITEMS READILY

TRADED IN THE EXPORT MARKETS.

• THE DEMAND IS STEADILY GROWING, PROFITS ARE HIGH.
• THEY HAVE A SHORT GROWING PERIOD (120-135 DAYS).
• IT HAS EXCELLENT LOW - FEED CONVERSION RATIO OF

1:5:1.

• INDIA HAS A SUITABLE CLIMATE AND ALSO ABUNDANT

LABOUR REQUIRED IS THIS ENDEAVOR. CONT….

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MARINE PRODUCTS EXPORTS THERE HAS BEEN A PLEA FROM THE SEAFOOD EXPORTER’S ASSOCIATION :

• THE GOVERNMENT TO HAVE A COMPREHENSIVE POLICY

ON FISHERIES.

• GOVT. HAS TO LOOK INTO THIS AND TAKE THE INITIATIVE

AT THE EARLIEST.

• INDIA HAS 7000 KMS OF COASTLINE SPREAD OVER NINE

COASTAL STATES AND INNUMERABLE FISHERMEN DEPEND ON THIS SECTOR FOR THEIR LIVELIHOOD.

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GEM AND JEWELLERY INDIA DOMINATES :

• 85% OF THE WORLD DIAMOND MARKET IN TERMS OF

CARATAGE.

• 60%IN TERMS OF VALUE.
• 90% IN TERMS OF PIECES OR NUMBERS.
• THE ‘ROUGHS’ ARE IMPORTED FROM DIAMOND PRODUCING

COUNTRIES,THEY ARE CUT AND POLISHED IN INDIA AND EXPORTED.

• INDIA'S MAIN MARKETS INCLUDE:
• USA, JAPAN, EUROPE AND OTHER EMERGING COUNTRIES.

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GEM AND JEWELLERY

• WORLD TRADE IN CUT AND POLISHED DIAMONDS IS

ESTIMATED TO BE $ 35 BILLION.

• SEGMENT OF THE MARKET HELD BY INDIA IS OF LOW

VALUE.

• OUR MAJOR MARKETS ARE :

USA, BELGIUM, JAPAN AND HONG KONG.

• THESE FOUR MARKETS TOGETHER ACCOUNT FOR 80%

OF OUR EXPORTS.

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LEATHER AND LEATHER MANUFACTURES

• AROUND ONE-THIRD OF LEATHER AND LEATHER

MANUFACTURE EXPORTS IS ACCOUNTED FOR BY FOOTWEAR.

• MOST OF THE LEATHER PRODUCTS ARE EXPORTED TO

DEVELOPED COUNTRIES SUCH AS U.S.A., U.K., FRANCE, ITALY AND JAPAN.

• EXPORTS OF THIS SECTOR WITH VALUE ADDED PRODUCTS

CONTRIBUTES AROUND 80% OF EXPORTS.

• LEATHER GARMENTS, LEATHER FOOTWEAR AND LEATHER

GOODS CONSTITUTE MAJOR ITEMS OF EXPORT.

CONT….

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LEATHER AND LEATHER MANUFACTURES

• IN THE GLOBAL LEATHER TRADE INDIA'S SHARE IS 2.5%.
• IN GLOBAL LEATHER FOOTWEAR, INDIA EXPORTS HARDLY

1.41% .

• CHINA’S EXPORTS WERE $ 1 BILLION, DOUBLE THAT OF

INDIA'S IN THE LATE EIGHTIES.

• BY THE YEAR 2000, CHINA’S EXPORTS HAD SURGED TO

$12 BILLION, WHERE AS INDIA'S EXPORTS WERE HARDLY $ 2 BILLION.

CONT….

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LEATHER AND LEATHER MANUFACTURES REASONS FOR CHINA’S GALLOPING EXPORTS ARE :

• WORLD CLASS INFRASTURCTURE.
• SUBSTANTIAL FOREIGN INVESTMENT.
• DISCIPLINED WORKFORCE AT COMPETITIVE WAGE

LEVELS.

CONT….

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LEATHER AND LEATHER MANUFACTURES IF THE INDIAN GOVERNMENT HELPS: THE LEATHER INDUSTRY AT LEAST THREE OF ITS IMPORTANT CLUSTERS KANPUR, AGRA, JALANDHAR IN PUNJAB, RANIPET- AMBUR VANIAMBADI BELT IN TAMIL NADU, WITH EXCELLENT INFRASTRUCTURE FACILITIES AND FOREIGN DIRECT INVESTMENT FOR CAPACITY EXPANSION. THEN INDIA CAN LOOK FORWARD TO A VERY BRIGHT FUTURE IN THIS INDUSTRY.

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EXPORT OF SERVICES

• INDIA’S REVENUE FROM EXPORT SERVICES ROSE OVER

FOUR TIMES, FROM $ 4.6 BILLION IN 1990 TO $ 20.9 BILLION IN 2001.

• THE VARIOUS SEGMENTS ARE :

TRANSPORTATION, TRAVEL, COMMUNICATION, CONSTRUCTION, INSURANCE, BANKING AND FINANCE, TELECOM, CONSULTANCY, COMPUTER AND INFORMATION SERVICES etc.

• THE GLOBAL EXPORT OF COMMERCIAL SERVICES HAS

RISEN AT A FASTER PACE THAN MERCHANDISE EXPORTS BETWEEN 1990 AND 2001.

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EXPORT OF SERVICES TOURISM

• TOURISM OCCUPIES A VERY IMPORTANT PLACE IN THE

ECONOMIES OF THE SEVERAL COUNTRIES.

• INDIA’S EARNINGS FROM TOURISM IN THE YEAR 2001 WAS

HARDLY 0.66% AGAINST WORLD EARNINGS $ 457.8 BILLION.

• ACCORDING TO A STUDY BY CONFEDERATION OF INDIAN

INDUSTRIES, BY THE YEAR 2020 INDIA COULD GET 40 MILLION TOURISTS IF:

• THE NECESSARY SPADE WORK IS DONE BY INCREASING

HOTEL CAPACITY, ROADS AND TRANSPORT FACILITIES TO INTERNATIONAL STANDARDS, WELL EDUCATED AND TRAINED GUIDES.

• INDUSTRY COULD EMPLOYEE 50 MILLION PEOPLE.

CONT….

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EXPORT OF SERVICES TOURISM

• THE WORLD’S NUMBER ONE EARNER FROM TOURISM IS

THE USA, EARNING $ 75 BILLION, MORE THAN THE ANNUAL EXPORTS OF INDIA.

• AMONG THE TOP FOREIGN EXCHANGE EARNERS IN THIS

SECTOR ARE:

• ITALY, SPAIN, FRANCE AND U.K.
• AMONG THE DEVELOPING COUNTRIES THOSE FIGURE ARE:
• THAILAND, PHILIPPINES, MALAYSIA, KENYA AND INDIA.

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EXPORT OF SERVICES SOFTWARE, I T AND I T ENABLED SERVICES

• ONE OF THE FASTEST GROWING DIVISIONS OF THE

INFORMATION TECHNOLOGY FIELD IS COMPUTER SOFTWARE.

• INDIA ENTERED THE FIELD IN THE EIGHTIES, BUT THE

REGULATORY FRAME WORK IMPOSED BY THE GOVERNMENT IN THE IMPORTS AND EXPORTS OF THE HARDWARE AND SOFTWARE HAD AN ADVERSE IMPACT ON THE GROWTH OF THE INDUSTRY.

• BIG STRIDES WERE BEING MADE IN THESE SECTORS IN THE

WEST, BUT INDIA'S CONTRIBUTION WAS NOT MUCH AT ALL, IN SPITE OF PROVEN ABILITIES IN THE FIELD.

CONT…..

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EXPORT OF SERVICES SOFTWARE, IT AND IT ENABLED SERVICES

• INDIA IS QUIETLY BUT QUICKLY EMERGING AS ONE OF THE

LEADERS IN THE FIELD.

• INDIA IS EMERGING AS A COUNTRY THAT OFFERS COST-

EFFECTIVENESS, GREAT QUALITY, HIGH RELIABILITY, RAPID DELIVERY, AND ABOVE ALL STATE-OF-THE-ART TECHNOLOGIES IN SOFTWARE DEVELOPMENT.

• IT IS NO WONDER THAT MORE THAN 200 OF ‘FORTUNE 500’

COMPANIES OUTSOURCE THEIR SOFTWARE REQUIREMENTS TO INDIA.

CONT…..

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EXPORT OF SERVICES SOFTWARE, I T AND I T ENABLED SERVICES

• OUTSOURCING REDUCES COSTS CONSIDERABLY.
• MANY ESTABLISHED COMPANIES ABROAD HAVE OPTED TO

OUTSOURCE THE ENTIRE I T OPERATION TO AN OUTSOURCER WHO MANAGES THE INFRASTRUCTURE FROM AN OPERATIONS MANAGEMENT CENTRE SET UP SEPARATELY.

• OUTSOURCING HELP BIG COMPANIES ABROAD TO FOCUS

ON THEIR CORE BUSINESS, AND GET ROUND THE CLOCK SERVICE FROM THE OUTSOURCING.

• COMPANIES GET BENEFIT BY GAINING ACCESS TO THE

LATEST TECHNOLOGY DEVELOPMENT WITHOUT INVESTING ANYTHING FOR THE INFRASTRUCTURE.

CONT….

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EXPORT OF SERVICES SOFTWARE, I T AND I T ENABLED SERVICES

• THE INDIAN COMPANIES ARE MOVING UP THE VALUE CHAIN

WITH THE EMERGENCE OF NEW SERVICES SUCH AS:

• PACKAGE SOFTWARE IMPLEMENTATION.
• SYSTEMS INTEGRATION.
• NETWORK MANAGEMENT.
• R&D SERVICES.
• KNOWLEDGE SERVICES AND
• ENGINEERING DESIGN.

CONT….

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EXPORT OF SERVICES SOFTWARE, I T AND I T ENABLED SERVICES HAVING SEEN THE ADVANTAGES OF OUTSOURCING -----

• MANY OF THE BIG PLAYERS IN THE I T SERVICES FIELD

SUCH AS IBM, ACCENTURE, HP, ERNEST & YOUNG etc. HAVE THEIR OWN FULLY OWNED SUBSIDIARIES IN INDIA, TO UTILIZE THE LARGE TECHNICAL / SKILLED PERSONNEL AVAILABLE HERE AND PROVIDE COMPETITIVE SERVICES TO THEIR CLIENTS ABROAD.

CONT….

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EXPORT OF SERVICES SOFTWARE, I T AND I T ENABLED SERVICES

• ANY OUTSOURCING SERVICES OBVIOUSLY REDUCES JOBS

IN THE PARENT COMPANY OR OTHER SERVICES PROVIDERS IN THE COUNTRIES CONCERNED.

• THIS LOSS OF JOBS HAS BECOME A BIG ISSUE IN THE USA

AND IS BEING POLITICIZED.

• THERE ARE EFFORTS TO LEGISLATE ACTS IN THE

RESPECTIVE STATES TO PREVENT OUTSOURCING.

CONT….

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EXPORT OF SERVICES SOFTWARE, I T AND I T ENABLED SERVICES

• THE TRAINED MANPOWER REQUIREMENT IS ENORMOUS

FOR THIS INDUSTRY.

• GOOD TRAINING FACILITIES IN INDIA ARE NOT ADEQUATE.
• THOUGH EVERY INSTITUTION HAS COMPUTER EDUCATION

AS A COURSE, THERE ARE ONLY A FEW WHICH CAN TRAIN WORLD-CLASS SOFTWARE PROFESSIONALS.

• THE INDUSTRY AND THE GOVERNMENT SHOULD PUT THEIR

HEADS TOGETHER, AND SHOULD RAISE THE QUALITY OF COMPUTER EDUCATION.

CONT….

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EXPORT OF SERVICES BUSINESS PROCESS OUTSOURCING (BPO)

• IT IS THE ACT OF TRANSFERRING SOME OF THE

ORGANIZATION’S REPEATED NON-CORE AND CORE BUSINESS PROCESSES TO AN OUTSIDE PROVIDER TO ACHIEVE COST REDUCTION WHILE IMPROVING SERVICE QUALITY.

• IF DONE WELL BPO RESULTS IN INCREASING

SHAREHOLDER VALUE.

• THE MAIN DIFFERENCE BETWEEN BPO AND MORE

TRADITIONAL OUTSOURCING IS THAT BPO OFFERS COMPANIES A WAY OF ACHIEVING TRANSFORMATION OUTCOMES MORE QUICKLY.

CONT….

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EXPORT OF SERVICES BUSINESS PROCESS OUTSOURCING (BPO) THE BPO INDUSTRY IN INDIA CONSISTS OF :

• MNCs ESTABLISHING THEIR BPOs.
• BPO COMPANIES FROM USA AND UK SETTING UP THEIR

OPERATIONS IN INDIA.

• INDIAN BPO COMPANIES STARTED BY RENOWNED

I T FIRMS AND OTHERS IN INDIA.

CONT….

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EXPORT OF SERVICES BUSINESS PROCESS OUTSOURCING (BPO)

• CALL CENTRE BUSINESS IS ALSO A PART OF BPO.
• THERE IS A CLEAR SHIFT FROM THE CALL CENTRES TO

TRANSACTION PROCESSING SYSTEMS LIKE CHEQUE- CLEARING, BANKING TRANSACTIONS, INSURANCE TRANSACTIONS etc.

• MANY UNITS WHICH FIRST STARTED AS CALL CENTRES,

ARE GOING UP THE VALUE CHAIN.

• IT IS NO LONGER A LOW COST MANPOWER BUT

INCREASINGLY BRAINPOWER THAT IS MAKING INDIA A PREFERRED DESTINATION.

CONT….

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INDIA’S EXPORT TRADE

EXPORT OF SERVICES BUSINESS PROCESS OUTSOURCING (BPO) ACCORDING TO NASSCOM-McKINSEY REPORT------

• THE TOTAL OPPORTUNITY FOR BPO IS AROUND

$ 140 BILLION.

• IF INDIA CAPTURES ONE SIXTH OF IT, IT WOULD

TRANSLATE INTO 500,000 JOBS BY 2020 WITH A REVENUE OF U.S. $ 24 BILLION.

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Chapter No. Page No.

Export Management

INDIA’S EXPORT TRADE

IMPORTS

• THE IMPORT POLICY REGIME HAS BEEN SUBSTANTIALLY

LIBERALIZED IN KEEPING WITH THE LOGIC AND TENOR OF ECONOMIC REFORMS.

• IMPORT SUBSTITUTION AS AN OBSTINATE OBSESSION IS

NO LONGER THE GUIDING PRINCIPLE OF THE TRADE POLICY.

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INDIA’S EXPORT TRADE

FUTURE IN TODAY’S CONTEXT THE FAST GROWING SECTORS IN EXPORTS, WHICH INDIA SHOULD CONCENTRATE:

• ENGINEERING GOODS AND PROJECTS EXPORTS.
• LEATHER AND LEATHER PRODUCTS.
• MARINE EXPORTS.
• GEM AND JEWELLERY EXPORTS.
• CHEMICAL EXPORTS.
• TEXTILE EXPORTS.
• SOFTWARE AND ALLIED SERVICES, AND AGRICULTURAL

EXPORTS.

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